MCC VP HEWKO DRIVES HOME COST OF BAD ELECTIONS

C O N F I D E N T I A L SECTION 01 OF 02 YEREVAN 000307

SIPDIS

SIPDIS

DEPT FOR EUR/CARC, EUR/ACE

E.O. 12958: DECL: 03/15/2017
TAGS: PREL PGOV KMCA AM
SUBJECT: MCC VP HEWKO DRIVES HOME COST OF BAD ELECTIONS

REF: YEREVAN 0300

YEREVAN 00000307 001.2 OF 002


Classified By: CDA A. F. Godfrey for reasons 1.4 (b, d).

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SUMMARY
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1. (C) During his March 8-9 visit to Yerevan, MCC Vice
President for Operations John Hewko praised Armenia's
implementation of the MCC Compact while sending a clear
message that in order to remain eligible for funding,
elections in May must be a "significant improvement towards
full compliance with international standards." All of Hewko's
Armenian interlocutors, including the Prime Minister, Foreign
Minister, and Parliament Speaker, recognized the
conditionality of the MCC funding. Opposition politicians
shared their recurrent complaints with Hewko, but were
divided over whether MCC should actually cut the cash, given
what they see as the inevitability of flawed elections.
Hewko's visit was timely, and his message was clearly
delivered and clearly received. His public message was
covered broadly and objectively (ref). End Summary.

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GOVERNING COUNCIL: GOOD IMPLEMENTATION, BAD POLITICS
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2. (C) During his meeting with the MCA-Armenia Governing
Council, Hewko conveyed his full satisfaction with the
MCA-Armenia program's implementation, but underscored that
the program was at risk of suspension or termination if
Armenia failed to reverse declines in the MCC "Ruling Justly"
indicators. A critical test would be how the GoAM prepared
for and conducted the upcoming parliamentary elections.
(NOTE: The Governing Council is chaired by Prime Minister
Andranik Markarian and includes the ministers of Territorial
Administration, Finance and Economy, Agriculture,
Transportation and Communications, and the President's chief
economic advisor, as well as five representatives of civil
society. END NOTE.) Markarian said he understood that
Armenia's continued eligibility for funding under the MCC was
closely linked to its democratic reform.


3. (C) Immediately following the MCA-Armenia Governing
Council meeting, Hewko, Charge d,Affaires, and MCC Resident
Country Director Alex Russin met with the Prime Minister
privately to seek assurance that Hewko,s message would be
relayed to President Kocharian. The Prime Minister confirmed
this and acknowledged the vital importance of free and fair
elections. (NOTE: On March 2, MCC CEO John Danilovich sent a
formal letter to President Kocharian with the same message.
END NOTE.)

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DON'T LIKE FREEDOM HOUSE? GO TALK TO THEM
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4. (C) During his meeting with National Assembly Speaker
Tigran Torosian, Hewko again stressed the conditionality of
the MCC funding and its linkage to the elections. Torosian
outlined several of the constitutional improvements related
to the election process that Armenia had made but also
assumed a more defensive posture than the Prime Minister,
questioning Freedom House's motives and its role in forming
the MCC Ruling Justly indicators. Hewko responded that MCC
used Freedom House for all 25 MCC-compact eligible countries,
and that Armenia was not singled out. He also told Torosian
that MCC had facilitated a meeting between Armenia's
Ambassador in Washington and Freedom House to discuss
Armenia's progress and areas where improvements were
necessary. Hewko invited Torosian to take advantage of this
opportunity to engage Freedom House directly.

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OSKANIAN HEARD THE SAME MESSAGE IN WASHINGTON
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5. (C) Foreign Minister Vartan Oskanian told the delegation
that he had discussed MCC eligibility and the upcoming
elections during his recent meeting with Secretary Rice in
Washington. Hewko briefed Oskanian on his meetings with
Torosian and the MCA-Armenia Governing Council, and
reiterated the message about the conditionality of MCC
funding.

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OPPOSITION PARTIES DIVIDED OVER WHETHER TO CUT FUNDING
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YEREVAN 00000307 002.2 OF 002




6. (C) Opposition politicians complained about election fraud
and government pressure during a March 9 roundtable with
Hewko, but two of three said they would not advocate cutting
MCC funding in response to flawed elections. Hewko told the
politicians -- National Unity's Artashes Geghamian, Republic
Party's Aram Sargsian and People's Party's Stepan Demirchian
-- that MCC would watch the election "very closely," and
asked what an appropriate response would be, should the
elections be compromised. "I will never say, Don't help
our people,," Demirchian said, vaguely noting that the USG
had "other levers" to influence the government. Sargsian
disagreed, saying that "the real Millennium Challenge is the
government, not poverty and bad roads." Sargsian asked Hewko
not to impose double standards. "When elections are
worsening, every time you say they are a step forward.
Everyone knows elections are worse and worse," he said.
Sargsian said MCC should withhold assistance if Armenia
doesn't meet the standards.

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COMMENT
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7. (C) While Hewko was not the first senior USG official to
visit Yerevan with the message of MCC funding conditionality,
his visit was very timely. Hewko's interlocutors appeared to
understand that the funding was on the line and that MCC
would not waste resources by sending a senior official to
Yerevan if it were not fully prepared to suspend the program
in the event of fraudulent elections. While we regret that
President Kocharian did not make time to meet with Hewko, but
we are sure that the message got through loud and clear.
GODFREY